Shares of mining conglomerate Vedanta Ltd continued their impressive rally on Wednesday, December 17, climbing for the seventh straight trading session. The stock surged another 2% during the day to achieve a fresh all-time high of ₹580.45 per share. This remarkable run has resulted in a cumulative gain of 13.5% over the past week.
Demerger Approval Fuels Investor Optimism
The sustained upward momentum is largely driven by positive investor sentiment following a key regulatory nod. The National Company Law Tribunal (NCLT) has approved the company's ambitious plan to split into five separately listed entities. Vedanta has stated that this strategic demerger is designed to reduce debt, create focused independent businesses, and unlock significant value for its stakeholders.
According to the 2023 announcement, the group will be restructured into: Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Iron and Steel, and a new Vedanta Ltd that will hold the zinc and silver businesses (via Hindustan Zinc) and act as an incubator for new ventures.
Brokerages Raise Targets on Unlocked Value
Following the NCLT clearance, several domestic brokerages have revised their outlook on the stock upwards. Kotak Institutional Equities upgraded its rating on Vedanta to "Buy" from "Add" and raised its price target to ₹650 from ₹550. The brokerage noted that debt concerns related to its parent, Vedanta Resources, are now largely in the past.
In a similar vein, Nuvama Research, in a report dated November 20, estimated that the demerger could unlock value by improving valuations of businesses like aluminium, steel, and power. It pegged a fair value of ₹686 per share, which could be enhanced by ₹84 per share once the demerger is effective. "We estimate our fair value of ₹686 shall be enhanced by ₹84/share once the demerger comes into effect," Nuvama stated.
ICICI Direct Research also maintained its 'buy' rating with a target of ₹650, citing robust non-ferrous metal prices, strategic expansion, controlled leverage, and an attractive dividend yield.
Sector-Wide Strength and Annual Performance
The rally wasn't limited to Vedanta alone. Other key metal stocks also traded higher, supported by firm base metal prices and a softening US dollar. This broader sectoral strength provided a favourable backdrop for Vedanta's ascent.
On an annual basis, Vedanta's shares have delivered a return of 29% so far this year, building on a substantial 72% jump in 2024. After a slow start to the year, the stock gained significant momentum, fueled by the rally in base metals and the progressing demerger plan.
The proposed demerger is structured as a simple vertical split. This means that for every existing share of Vedanta Ltd (VEDL), a shareholder will receive one additional share in each of the five newly listed companies, facilitating a seamless transition for investors.
